Lagarde Warning IMF Concerned about Possible German Austerity

Date: 27-12-2012
Source: DER SPIEGEL

International Monetary Fund head Christine Lagarde has said that Germany should be the motor of growth in the EU.

Germany should move slower on fiscal consolidation and savings to counteract the economic effects of austerity programs currently throttling growth in Southern Europe, argues Christine Lagarde. Still, the IMF chief remains cautiously optimistic about the euro-zone’s economic prospects for the next year.

International Monetary Fund head Christine Lagarde has said that Germany should not be looking at measures aimed at consolidating its finances, apparently in concern over a SPIEGEL report indicating that the German Finance Ministry is working on a far-reaching package of spending cuts and tax hikes for introduction following general elections next autumn. In an interview with the Thursday edition of the influential weekly Die Zeit, she said that Germany needs to continue to work as a counterbalance to the biting austerity programs passed in crisis-stricken countries in Southern Europe.

After The Fat Lady Sings

Author: Edward Hugh · November 25th, 2012 · RGE EconoMonitor

Financial journalists across the globe were both surprised and puzzled recently when they heard Christine Lagarde using a strange expression. “You know, it’s not over until the fat lady sings, as the saying goes,” she told bemused reporters at a press conference in Manilla. Which fat lady, and what does she sing must have been questions going through the heads of many of those present.

Further investigation would have lead them to discover that far from this being some new piece of feminine wisdom that the IMF DG wanted to transmit, the phrase in fact comes from the rather male world of business deals and contact-sport-commentators and is generally used to describe closely contested matches, or deals which won’t be struck till the final offer is actually made.

Ms Lagarde naturally had other things in mind. She was referring to the state of negotiations surrounding the latest Greek bailout review, prior to the handing over of that long awaited 31.5 billion euro tranche the country so badly needs to meet its ongoing commitments. The curious thing about the holdup in this case is that it isn’t the result of a stand-off between the Troika and the Greek government. Last week the Greek parliament passed the final set of budget decrees required by the international lenders to enable the transfer.

No, in this case the dispute is an “internal affair” between the rival parties which make up the Troika, and in particular between the German government and the IMF. The issue is how to leave Greek finances having at least the appearance of being on a stable and sustainable path, which in this case is defined as attaining a sovereign debt level of 120% of Greek GDP come 2020. Delaying the country’s fiscal objectives by 2 years effectively means putting back the theoretical attainment of that objective by the same amount of time – until 2022. Jean-Claude Juncker was willing, but the IMF is digging its heals in. Any new agreement, Ms Lagarde said as she left Manilla en route for Tuesday’s Brussels EU finance ministers meeting, should be “rooted in reality and not in wishful thinking.” Tut tut, Mr Juncker.

How to Get the Balance Right: Fiscal Policy at a Time of Crisis

Authors: Anders Borg & Christine Lagarde · May 7th, 2012 · IMF Direct

Last autumn was a turbulent time for Europe. The debt crisis deepened and financial markets became embroiled in turmoil, driven by fears of widespread restructuring of public debt. The crisis has harmed growth, increased unemployment, and left a large number of people less protected.

We are now seeing some signs of stabilization. Most countries are reducing their deficits and even if debt ratios are still rising, the return back to fiscal health has begun. (Wo leben die? In Washington! hfk)

The International Monetary Fund and the Swedish Ministry of Finance are hosting an international conference in Stockholm on May 7-8, with the purpose of sharing knowledge and providing guidance on the best way to achieve fiscal consolidation, and on the role that effective fiscal policy frameworks and institutions can play in this endeavor.

Learning from experience

Draghi, Soros, Geithner, Roubini, Calderon, Merkel: In Their Own Words From the WEF on the Europe Crisis Via Bloomberg

http://www.economonitor.com/nouriel/2012/01/30/draghi-soros-geithner-roubini-calderon-merkel-in-their-own-words-from-the-wef-on-the-europe-crisis-via-bloomberg/

Driving the Global Economy with the Brakes On

Author: Olivier Blanchard, IMF · January 24th, 2012 ·

After the speech by the IMF’s Managing Director in Berlin yesterday, my main messages on the global outlook will not surprise you.

Starting with the bad news–the world recovery, which was weak in the first place, is in danger of stalling. The epicenter of the danger is Europe, but the rest of the world is increasingly affected.

There is an even greater danger, namely that the European crisis intensifies. In this case, the world could be plunged into another recession.

Turning to the good news–with the right set of measures, the worst can definitely be avoided, and the recovery can be put back on track. These measures can be taken, need to be taken, and need to be taken urgently.

IMF Head Christine Lagarde

Date: 23-01-2012
Source: NewsWeek

The truth talker. As head of the International Monetary Fund, can Christine Lagarde steer Europe and America away from the brink of the next Great Depression?

Friday the 13th of January dawned grim at the International Monetary Fund in Washington, D.C. The news blowing in from across the Atlantic, as often happens these days, brought the smell of disaster like an approaching hurricane. The credit scores of France and eight other European countries had just been knocked down. Negotiations to bail out an all-but-bankrupt Greece had stalled, or died—it wasn’t clear which.

At a meeting that morning, the fund’s board heard that European countries were not doing the maximum necessary to stave off a financial implosion that could suck the life out of America’s anemic recovery and bring Western economies again to the brink of recession, or worse.

Christine Lagarde, the former French finance minister who has been at the top of the fund since last summer, sat at the head of the oblong ring of seats in a conference room lined with portraits of past IMF managing directors, all of them men. (Her immediate predecessor, Dominique Strauss-Kahn, resigned in the midst of a sex scandal last May; his painting has yet to be put up.) Lagarde listened calmly as the 24 representatives of 187 different countries took in the bleak news, delivered by one of her key aides. Good, she thought. The staff, which has its antennae everywhere, told what the whole truth is. From her point of view, that made it a positive meeting. “Telling truth is our job,” she said. There is still time to prevent a second collapse, she believes. But not much time.

IMF warns that world risks sliding into a 1930s-style slump

Date: 16-12-2011
Source: The Guardian

Christine Lagarde calls for global unity to tackle financial crisis as French launch verbal broadsides at David Cameron and UK

Christine Lagarde shares a platform in Washington with Hillary Clinton, the US secretary of state. Photograph: Benjamin J Myers/Corbis

The world risks sliding into a 1930s-style slump unless countries settle their differences and work together to tackle Europe’s deepening debt crisis, the head of the International Monetary Fund has warned.

On a day that saw an escalation in the tit-for-tat trade battle between China and the United States and a deepening of the diplomatic rift between Britain and France, Christine Lagarde issued her strongest warning yet about the health of the global economy and said if the international community failed to co-operate the risk was of “retraction, rising protectionism, isolation”.

She added: “This is exactly the description of what happened in the 1930s, and what followed is not something we are looking forward to.”

Turbulenzen an den Märkten: IWF-Chefin sieht Italiens Glaubwürdigkeit als Hauptproblem

handelsblatt.com, 4/11

Anleger meiden Italien, die Risikoaufschläge für Staatsanleihen steigen, die Aktienkurse fallen. „Fehlende Glaubwürdigkeit“, meint Christine Lagarde, Chefin des IWF, der die Finanzen des Landes künftig überwachen wird.

Christine Lagarde, Chefin des Internationalen Währungsfonds. Quelle: AFP

Cannes, Bari. Die Probleme Italiens an den Finanzmärkten sind nach Ansicht des Internationalen Währungsfonds (IWF) durch einen Mangel an Glaubwürdigkeit zu erklären. IWF-Chefin Christine Lagarde sagte am Rande des G-20-Gipfels im französischen Cannes, dies werde sowohl von der italienischen Regierung als auch ihren Partnern so gesehen. Den angekündigten italienischen Maßnahmen gegen die Krise fehle es an Glaubwürdigkeit, fügte sie hinzu.

The world economy: A call to arms

Date: 28-08-2011
Source: The Economist

IT IS largely a gathering of central bankers; at the outset of her speech she apologised for not being one. Yet by far the most hard-hitting words at this year’s Jackson Hole symposium came from Christine Lagarde, the former French finance minister and new managing director of the IMF.

The world economy, she said, was entering a “dangerous new phase” driven by a sense that “policymakers do not have the conviction” to take decisions that are needed. That must change, and now. Ms Lagarde laid out a bold to-do list to support growth, including a forced capital injection into Europe’s banks, aggressive new action to deal with America’s foreclosure crisis, and a broad rebalancing of fiscal priorities.

The most headline-grabbing prescription was for Europe’s banks. More capital, Ms Lagarde argued, was essential to “cutting the chains of contagion” in the euro crisis. Without it there could easily be “the further spread of economic weakness to core countries, or even a debilitating liquidity crisis”. She called for what would essentially be a European version of America’s policy for its biggest banks in 2008—a mandatory capital increase using public funds if necessary. Those funds could come from the European Financial Stability Fund.

IWF: Wer mit Lagarde um den IWF-Chefposten rangelt

Internationaler Währungsfonds

Wer mit Lagarde um den IWF-Chefposten rangelt

FTD, 25/5

Das Kandidatenfeld für die Nachfolge von Strauss-Kahn lichtet sich. Frankreichs Finanzministerin gilt als große Favoritin. Doch die Schwellenländer haben ihren Anspruch noch nicht aufgegeben. Die möglichen Bewerber im Überblick. von Kai Beller Berlin

Das Rennen um die Besetzung des IWF-Chefpostens nimmt Fahrt auf. Die Europäer beanspruchen die Führung der Washingtoner Institution für sich. Doch die auftstrebenden Schwellenländer stellen diesen Anspruch in Frage. Anders als die Europäer haben sie sich aber bislang nicht auf einen gemeinsamen Bewerber verständigt.

Christine Lagarde

Die französische Finanzministerin Christine Lagarde

Die 55-Jährige ist die große Favoritin für die Nachfolge Strauss-Kahns. Sie genießt die Unterstützung der Euro-Länder – auch der Bundesregierung. Ihre fachliche Kompetenz ist unbestritten. Sie hat sich während der Finanzkrise durch ihr souveränes Auftreten im Kreis der führenden Industrie- und Schwellenländer (G20) großes Ansehen erworben.

Die Financial Times verlieh der fließend Englisch sprechenden Politikerin 2009 den Titel der “besten Finanzministerin Europas”. Zuvor arbeitete sie für die Anwaltsozietät Baker MacKenzie. 1999 wurde sie “Madame Chairman” dieser weltweit operierenden Kanzlei. Erst 2005 wechselte sie in die Politik als Außenhandelsministerin. Nach dem Wahlsieg Nicolas Sarkozys übernahm sie das Finanzministerium.

Lagarde wäre die erste Frau an der Spitze des IWF. Zugleich würde sie die französische Dominanz bei der Washingtoner Institution fortsetzen. Trotz Kritik an der europäischen Vorherrschaft beim IWF kann sie offenbar auch auf Unterstützung einflussreicher Schwellenländer setzen. China beispielsweise soll keine Einwände gegen die Französin haben.